SAP co-CEO defends price of Sybase deal

Chris Kanaracus |
May 18, 2010

The vendor is set to pay US$5.8 billion for Sybase, an amount some analysts say is too high

ORLANDO, 17 MAY 2010 - Contrary to the opinions of some analysts, US$5.8 billion is not too much for SAP to pay for mobile and database technology vendor Sybase, SAP co-CEO Bill McDermott said during a press conference at the Sapphire conference in Orlando on Monday.

"Exceptional assets don't come cheap," McDermott said. "This gives us the number-one position in mobility. I believe, as does [co-CEO Jim Hagemann Snabe], that the new desktop is the mobile device. ... This is a dynamite transaction for both sides and we're very, very confident it will play out that way in the marketplace.

The $5.8 billion offer represents a 44 percent premium over Sybase's average stock price over the past few months, according to SAP. Some observers have speculated that the seemingly rich sum is meant to fend off counter bids from rivals, with Hewlett-Packard a favorite guess.

Once completed, the Sybase acquisition will increase growth "from day one," said McDermott, who indicated that major cost-cutting and layoffs aren't on the table. "It's very important that the Sybase people understand this is about growth, customer satisfaction and expansion of the SAP ecosystem," he said.

Apparently alluding to SAP's highly acquisitive rival Oracle, McDermott said the Sybase deal "will not be like some of the other acquisitions ... in the northern California area" where "people have been demoralized."

There will be "no change to the way SAP goes to market" following the Sybase acquisition, even as it gains a broader portfolio of technology, according to McDermott. "We are totally open to the ecosystem. We don't believe in lock-in. We don't believe in stacks," he added, making another apparent allusion to Oracle.

This year's Sapphire event is happening simultaneously in both Orlando and Frankfurt. SAP is hoping the show can help shut the door on a couple of rocky years marked by flagging sales and loud customer discontent over a support price increase, as well as serve as a launch pad for a wave of promised innovation.